Philippine Airlines Plots Plan for Future, Expands US Reach

Now under the leadership of Jaime Bautista and Lucio Tan Group, Philippine Airlines is beginning to plot its plans for the future, beginning with the original plans to expand its reach in the United States. In addition to its existing service to Honolulu, Guam, San Francisco, and Los Angeles, the nation's flag carrier intends to expand its operations to other areas of the United States, where large overseas Filipino populations are present.

Copyright Photo: Angelo Agcamaran/PPSG
Beginning next month, Philippine Airlines will increase its presence in Honolulu, where it currently flies four times weekly to a daily flight in December. The daily service is set to begin on December 11 with flights operated by an Airbus A340-300 aircraft. The increase in service to Honolulu comes in addition to an increase in flights to Guam, which will also be served daily.

However, the most anticipated new route is the flight to New York, which will see the return of Philippine Airlines after a nearly twenty year absence. PAL last operated to New York in 1997, when it was forced to abandon the route due to feasibility and economic constraints. Although the carrier has long had a desire to restore its many destinations in the United States, it was prevented from doing so due to the restrictions of Category 2 status imposed by the US Federal Aviation Administration, which was only lifted earlier this year. 

Philippine Airlines is concentrating on the US market rather than Europe, as the European market is an incredibly competitive and difficult market to operate profitably in. The flights to New York are expected to commence on March 15, 2015. They will be operated four times weekly via Vancouver, Canada, as opposed to non-stop service. It will be flown using one of the carrier's A340-300 aircraft. 

In New York, PAL is expected to use Terminal 1 at New York's John F. Kennedy International Airport. In addition to New York, Philippine Airlines is expected to increase its service to Toronto from three to four weekly flights. As part of the New York and Toronto expansion, flights from Manila to Vancouver will increase from daily flights up to eleven weekly. According to Philippine Airlines, this will give the carrier as many as three daily departures from Manila to Vancouver on certain days with a mid-afternoon, early evening, and late evening departure. 

Meanwhile, as Philippine Airlines looks beyond its existing expansion plans, newly reinstated PAL President Jaime Bautista seems to be taking a more pragmatic and conservative approach to expanding the carrier. While the carrier seeks a new strategic partner over the next few years, Philippine Airlines is looking at more cost effective ways of expanding to new markets.

The return of Philippine Airlines to New York will mark the carrier's 74th year of operations. According to Bautista, the carrier intends to become a long-term resident in the Big Apple. "This time, we'll be back for good," said Bautista. PAL is optimistic about the prospects in New York with a catchment potential of nearly half a million Filipinos. "If we get just 30 percent of this, we will be very successful indeed," added Bautista.

In order for that to come true, Philippine Airlines is counting on the 250,000 Filipinos that reside in New York, the 75,000 in Washington DC, the 31,000 in Philadelphia, and the 90,000 in East Virginia. The United States boasts the largest population of overseas Filipinos. Of the 3.4 million Filipinos currently living in the US, approximately 15 percent reside along the Eastern seaboard. 

This provides PAL with a fairly healthy market base from which to draw passengers. However, competition is fierce with Cathay Pacific operating flights of its own from New York to Asia. This means that in order for PAL to be successful, it will need to be competitively priced and offer a top notch on-board product. Many question whether the carrier's ageing A340-300 are up to the challenge.

When the Lucio Tan Group regained control of Philippine Airlines, it immediately said that it would be deferring plans for further expansion in Europe and the Middle East. Most aviation analysts would agree that this is a prudent decision as the US market is far more promising. According to Bautista, while there is a healthy population of overseas Filipinos in the Middle East, there are a number of other factors that are hampering the carrier's expansion plans. 

"We deferred Manila-Doha because of the low passenger traffic," said Bautista. "In Jeddah, we can't have the time slot we want. We're being given a 4:00am departure time. In Abu Dhabi, we wanted to operate daily but we can only operate four times weekly." He added that PAL also wants daily flights to Dubai but can only have five weekly, while service to Riyadh is being postponed because they can't have the additional flights they want.

In spite of that, Bautista intends to ensure that the eight aircraft initially acquired for use in the Middle East will find a profitable route to operate. But for now, Bautista is setting his sights on expanding through code share arrangements, which is the current industry trend.

Bautista says that PAL can enhance its presence in Europe, the Middle East, and Eastern United States through code share agreements with its newly established partner carrier, Etihad. In addition, Philippine Airlines can serve other markets in Japan and Asia through its partnership with All Nippon Airways. "This is the trend in the industry, expanding your routes by code shares, joint ventures, and other programs of cooperation," added Bautista.

Although Philippine Airlines was taken in the direction of a hybrid or low-cost carrier by the San Miguel Corporation, Ramon Ang, and its foreign consultants, Bautista and the Tan regime have an entirely different direction for the nation's flag carrier: to become one of the world's five star airlines. 

At present, Philippine Airlines is currently ranked as merely a three star airline, which is hardly an impressive feat compared to its many neighbours in Asia which boast four and five star status. Most notably, Philippine Airlines must compete with the likes of Singapore Airlines and Cathay Pacific, which have both earned accolades in recent years as two of the top carriers in the world. 

Although the future looks bright for PAL under Bautista, it still has a long road to climb before attaining five star status, a prestige that would make any nation proud of its national flag carrier. "We have to improve our service," said Bautista. "We need a good fleet, on time performance and cabin service at par with other five-star airlines. It will take a lot of work."

In order to attain those essential ingredients, Philippine Airlines will most likely need a strategic investor, which it hopes to attain within the next three years. The carrier hopes that it will be either an airline or a company with investments in airlines. Although PAL does not need any additional equity at the moment, Bautista says that an equity infusion will be required as the carrier expands in the future.

Meanwhile, Philippine Airlines will continue to nurture its sole destination in Europe: London. Although it got off to a turbulent start, the route is now beginning to receive a positive reception. With the better slot times in hand and the recently acquired Russian over fly rights, which will substantially decrease the travel time heading to Europe, Bautista plans to increase its London frequency from five weekly flights to daily service. The increase will serve the growing number of tourists between the two nations and the rising number of UK overseas Filipino workers. 

Although there are challenges that remain ahead for Philippine Airlines, the future seems to be looking rather bright and with the right moves and prudent expansion, Asia's first airline may just discreetly inch its way up the ranks to becoming one of the region's top carriers once again.

References: Manila Bulletin

52 comments:

  1. I hope everyone here will stop hating on our beloved Philippine Airlines and fly to New York with our state of the Art Airbus A340 to accommodate all your needs and desires :)

    ReplyDelete
    Replies
    1. State of the art A340.... Lol

      Delete
    2. Dude the a340 is old and it is time to retire it because if the a340 doesnt retire they be the same thing as they are right now

      Delete
    3. Can you please include Chicago because there is a hudge market coming from the Midwest. Thanks!

      Delete
    4. Why should i retire the A340? Its one of the most beautiful Aircraft in the Philippine Airlines fleet. Its the state of the art because we don't have IFEs and we are guaranteed to make you uncomfortable for the long journey to USA and Europe. Its better than our Boeing 777-300ERs.

      Delete
    5. You do not sound like Jaime Bautista, therefore, stop blogging for him. You do not even check your English grammar before posting your blog and you do not even know what a A340 is. Shame on you. Go find a job!.

      Delete
    6. Oh you say i don't sound like Jaime Bautista? How can you tell when i can't SPEAK over the Internet? Yes, I know what an A340 is and you SIR don't know what it is. Shame on me? Shame on you for talking back to the President of Philippine Airlines. Me and Lucio Tan are seeing all these Articles about us.

      Delete
  2. Lolz! It's rare to encounter a fellow Filipino use sarcasm in a funny way.

    ReplyDelete
  3. Sooner or later, you Filipino punks will start trash talking about me. Me and Mr. Bautista are doing a fine well job with Philippine Airlines. Stop saying Ramon Pang is better than me. He was useless to me. He cannot even speak proper English to me!!

    ReplyDelete
    Replies
    1. You are ungrateful Lucio Tan. It was RSA who worked to lift US restrictions so PAL can schedule more USA flights.

      Delete
    2. You are ungrateful Lucio Tan. It was RSA who worked to lift the EU ban so PAL can fly to European countries.

      Delete
    3. You are ungrateful Lucio Tan. It was RSA who worked so PAL can land its planes in London at primetime.

      Delete
    4. You are ungrateful Lucio Tan. It was RSA who worked so PAL can land its planes in Haneda

      Delete
    5. You are ungrateful Lucio Tan. It was RSA who modernized the PAL fleet.

      Delete
    6. You are ungrateful Lucio Tan. It was RSA who made PAL profitable in only 2 years. Do not say RSA was useless to PAL. That is bad manners Lucio Tan.

      Delete
    7. Shut up, You are the punk. You didnt retire in airbus 340 so your business is just junk as poop

      Delete
    8. You shut your mouth Filipino punk. Don't tell me how to run my Business. Don't like PAL, then don't fly with PAL.

      Delete
    9. Lucio what did my teachings say about gratitude? Always say thank you when you receive help. What did my teachings say about Karma? It is just around your corner. For good karma, open your wallet and buy 15 units of 777.

      Delete
    10. Screw your Karma. You are not my Feng Shui Master punk. I will not open my Wallet because i don't have a Million Peso bill. Care to lend me one?

      Delete
    11. Jaime Bautista should also know that aside from CX, the other toughest competitors in the NYC to Southeast Asia route are: Korean Air with A380 and B777; Singapore Air with B777; Air China with B777; China Southern with A380. PAL's A340 should have a modified 2-4-2 Economy Class seating to compete with the abovenamed carriers.

      Delete
    12. Lucio Tan I know you are doing a great job,you should retire or upgrade more entertainments in your aircraft,if you want to expand more destinations,stop using the big aircrafts when the hrs is just 2-6 hrs....You should use Airbus a330-300,and airbus a320-200 to a321...if you want to expand more destinations......Just upgrade you food and don't hire any foreign Chef's,heres why,...Many people comments negatively,I see any comments everywhere,the food was rubbish and disgusting....Lucio Tan you should serve boeing airplanes,heres why,boeing has a lot of aircrafts than airbus.......Just a suggestion if you want to....okkk Thank you...

      Delete
    13. Lucio Tan I know you are doing a great job,you should retire or upgrade more entertainments in your aircraft,if you want to expand more destinations,stop using the big aircrafts when the hrs is just 2-6 hrs....You should use Airbus a330-300,and airbus a320-200 to a321...if you want to expand more destinations......Just upgrade you food and don't hire any foreign Chef's,heres why,...Many people comments negatively,I see any comments everywhere,the food was rubbish and disgusting....Lucio Tan you should serve boeing airplanes,heres why,boeing has a lot of aircrafts than airbus.......Just a suggestion if you want to....okkk Thank you...

      Delete
  4. The best would be merging of Ramon Ang and Lucio Tan style of business. It would be the best for PAL. Unfortunately both tycoons hate each other. Ramon Ang did do a lot of good for PAL. Tan need just to keep it up and the flag carrier will be profitable. Revamp the long haul service and then resuscitate the ailing/dying regional / short haul service. TBH they shouldn't have split PAL express from PAL as this would only increase the cost of operation.

    ReplyDelete
    Replies
    1. Ramon Ang was not helpful to my company. He has NO idea how to run an Airline.

      Delete
  5. New York to Manila non-stop flight would be a very good start.

    ReplyDelete
    Replies
    1. Yes, dude, this is a good idea but make sure the aircraft has a 99 percent load factor and 65 percent should be business/first class passengers in order to break even! Remember, Singapore Airlines did this 18 months ago (flying nonstop from JFK to Singapore) but did not make a lot of money, so they rescinded or discontinued their plan. It's all the profit, man!

      Delete
  6. I flew in anticpation of nonstap flights to LAX.... Flight over was great on a 777 however on return they had substituted a A340.... With that we had to make a fuel stop on the way back....And it just seems to fly slower.....and no IFE. Wont do that again

    ReplyDelete
    Replies
    1. It's just but normal that flights LAX-MNL would be longer due to headwinds... I previously flew PR113 with A340 and it was a straight flight to MNL...

      Delete
    2. Lucio Tan should replace a 340s into 777s

      Delete
    3. The A340 fly's much slower cruise speed than the 777 or 747. It is a known pig....

      Delete
    4. Why are you saying our A340 is a pig? Unless you are a pig yourself.

      Delete
  7. PAL has no airplanes in their current configuration that will make nonstop JFK to MNL... The would need to lighten the load for even the 777-300ER's to make it in the winter months...

    ReplyDelete
    Replies
    1. Imagine all pax with balikbayan boxes n full load of fuel....

      Delete
  8. I think they are adding the guam and HNL routes specifically because the A340 needs fuel to make it both ways to the US....Hardly a state of the art airline....next they will have a bright idea of MNL-HNL-LAX-JFK in a A330 Would only take a day and half to get there....

    ReplyDelete
  9. RSA made some silly decisions. He retires PAL's old A-340s (all were bought brand new) and then leases Iberia's old A-340s. As with the B747s, airlines are eager get to rid of their A-340s and Iberia was lucky enough to find an airline that was dumb enough to lease their planes. RSA buys too many A321s and A-330s yet he doesn't make a move to buy the efficient long range planes PAL needs for its US expansion.

    ReplyDelete
  10. Still, it is LT who is the silliest of them all. LT is in PAL the longest time and LT should have known better. When RSA leased the A340s, LT approved it without thinking.

    ReplyDelete
    Replies
    1. you really don't get it do you? RSA had operational control of the airline and that included the ability to select waht airplanes to purchase. Your smart enough to understand RSA would not put himself in a position where he did not have control of the operation...

      Delete
    2. it is you who has little understanding of how a corporation works. a decision, esp one involving millions of dollars, cannot be arrived at without a board decision. the PAL board is dominated by LT and his sons. RSA cannot have leased the A340s without LTs approval. put that in your head.

      Delete
    3. You're right. There are too many bloggers who sound like elementary graduates of a third world country! What a shame!

      Delete
    4. Here we go again, another Filipino Punk talking about me. You punks blame me everything, yet Ramon Ang was the one to blame for everything that went wrong with PAL. I will never let this man take over my Business!

      Delete
    5. RSA is long gone from PAL. There is just Lucio Tan in PAL. Move along now and keep your eye on the ball.

      PAL is not competing with a food packaging firm like SMC so stop the RSA narrative already.

      Delete
  11. I am proud to read your article about Jaime Bautista realizing that PAL should match the onboard services of some of Asia's best airlines like SQ, OZ, KE and CX. Good planning, because most FilAms and green card holders have been used to being pampered by the abovementioned carriers, meaning: 2-4-2 economy seating (B777); generous offers of juices and soft drinks; savory inflight meal (love Korean dish); free headseats; fast and efficient service (walang arte manok and walang pa-cute female crew attitude stroking their fake blond hair while serving monay and family size coke); on-time departure and arrival; lavish (or labis) in-flight amenities like toothbrush, toothpaste, mouthwash, socks, sleeping mask, airline postcard, etc. Jaime, let your inflight employees and crews do a spot audit on KE, OZ, CX and SQ so they would see how to match their services or even upstage them later! By then, I will ready to fly PAL, thank you!

    ReplyDelete
  12. 2-4-2 economy seating on a 777? Tell me one single airline in the world that has this configuration please! Lol

    ReplyDelete
    Replies
    1. From Los Angeles, I have just flown Asiana B777 this year and Korean Air B777 last year. Or better still Google Korean Air B777 seating arrangements; Asiana B777 seating arrangements. From SFO, United flights to Hawaii and Guam have the same seating arrangements! I've flown United in September, 2013 as well. If you do not believe Google, then call the airlines or better still, fly them!

      Delete
    2. My goodness! All the airlines you mentioned either had 2-5-2 or 3-3-3. NOT 2-4-2! Such an amateur! There is not a single 777 in the world with 8-abreast seating in economy! Go ahead and check out the airlines websites or seatguru because it serms like you're lying and have never traveled!

      Delete
    3. Yeah dude 1:29pm. Before you pretend to be an experienced traveler do your research first. All 777's worldwide are either 9 or 10 abreast in economy. What a fool!

      Delete
    4. Naloka naman ako sa 2-4-2 seating configuration ng 777.... Lolz

      Delete
  13. It's ironic that PAL's A340 would meet with Iberia's A340 in JFK. What a small world!

    ReplyDelete

Powered by Blogger.